Harsh sentences in flipping case

Published: Friday, October 26, 2012 at 10:57 p.m.

Last Modified: Friday, October 26, 2012 at 10:57 p.m.

TAMPA - A federal judge, citing the seriousness of the vast flipping fraud scheme centered on Southwest Florida, meted out the harshest sentences to date in the case on Friday, including 10 years in prison for former Sarasota resident George Cavallo.

Cavallo’s wife, Paula Hornberger, received a year and a day, while the only other defendant in the real estate scheme who chose to go to trial rather than plead — former fraud investigator Joel Streinz — was sentenced to five years in prison.

Cavallo ultimately got the harshest treatment because the judge said she felt he was an old-fashioned man “who would take the hit so the lady in his life did not have to.”

“These cases coming before the Tampa Middle District and other districts in Florida are very serious cases,” said U.S. District Court Judge Elizabeth Kovachevich, who had presided over the trio’s criminal trial earlier this year. “They are a reaction to the collapse of the financial system in this country. That is not to be underestimated, and I don’t think the jury underestimated it.”

During the next five days, the rest of the 19 people indicted in the case — including scheme mastermind Craig Adams and his chief lieutenant, Rich Bobka — will be sentenced for their roles in a scheme that unfolded during the Southwest Florida real estate boom. That scheme involved artificially inflating the value of more than 150 properties and lying to lenders to get more than $200 million in mortgages.

Judge Kovachevich dealt with each defendant separately on Friday, starting with Streinz at 11 a.m. and ending with Hornberger at 7 p.m.

Moved by the fact that Cavallo and Hornberger have a 10-year-old son, the judge ruled that Hornberger should not receive the eight years in prison that government prosecutors were asking for, nor should she have to forfeit her condo in Kirkland, Wash.

But Kovachevich said she was not prepared to let Hornberger go unpunished: “I think you need a taste of prison,” the judge told the career nurse.

To Streinz, Judge Kovachevich said she wished he had never gotten involved with the conspiracy.

“But he took a criminal act and that is what his family and supporters have to realize — which Mr. Streinz has to realize, too,” Kovachevich said. “He is a federal felon. He knew what he was doing.”

Though the sentences handed down Friday were far longer than what any other participant in the case has received thus far, they are not as long as what government prosecutors were seeking.

Assistant U.S. Attorneys Christopher Tuite and Cherie Krigsman argued that the three defendants should receive even more time behind bars because of the sophistication of their crimes and the losses they inflicted on the banks that lent them more than $14 million — $8.3 million to Cavallo and Hornberger and $6.2 million to Streinz — in a five-year period.

The fraud was so complicated, Tuite said, that it was difficult for the title agent involved in the conspiracy — Lisa Rotolo — to reconstruct what happened.

Besides asking for enhanced sentences, Tuite and Krigsman repeatedly referred to the defendants as liars.

“It is your constitutional right to testify,” Tuite said to Streinz. “But it is not your constitutional right to lie.”

“She played the con out to the end,” Krigsman said, referring to Hornberger, who seemed at various points in the trial to have won some sympathy from jurors.

Krigsman said that there was not a person in the courtroom who did not empathize with a woman losing her 10-year-old son.

“But the devastation on this defendant’s family is a reflection of her selfishness,” Krigsman said. “She should have thought how her actions might affect her son.”

Defense attorneys battled back with efforts to present their clients in the best possible light, and by enlisting the defendants themselves.

“I come before you. I am 54,” Streinz said. “I have already lost so much — my entire life savings, the prospect for meaningful employment. My house.

Streinz said the case has taken a physical and mental toll on him and nearly cost him his marriage. “I will effectively be broke at the end of this case,” he said.

In equally emotional testimony, Cavallo blamed himself for putting his wife in harm’s way.

“I take full responsibility for my lack of judgment. I take full responsibility for this woman here,” Cavallo said, turning from the judge to point at Hornberger, who was sitting at the defense table. “The only reason she is here is because she trusted me. I failed this woman — and she’s an amazing woman.”

Cavallo said that he was busy in the Coast Guard during the height of the conspiracy and did not take the time to really figure out what his brother — Rich Bobka — was doing.

“I’m embarrassed by what he’s done to our family and to the people I love,” Cavallo said.

Hornberger told the judge that she was a broken woman.

“There were offers to plead guilty, but it felt so wrong to me,” Hornberger said. “That’s why I gave up my son for three months to have my say — to have my day in court. The alternative would have been to lie.”

If not for her son, Hornberger said, she would not care what happened to her.

“My spirit is broken,” she said. “My sense of self and my faith has been lost.”

<p><em>TAMPA</em> - A federal judge, citing the seriousness of the vast flipping fraud scheme centered on Southwest Florida, meted out the harshest sentences to date in the case on Friday, including 10 years in prison for former Sarasota resident George Cavallo.</p><p>Cavallo's wife, Paula Hornberger, received a year and a day, while the only other defendant in the real estate scheme who chose to go to trial rather than plead — former fraud investigator Joel Streinz — was sentenced to five years in prison.</p><p>Cavallo ultimately got the harshest treatment because the judge said she felt he was an old-fashioned man “who would take the hit so the lady in his life did not have to.”</p><p>“These cases coming before the Tampa Middle District and other districts in Florida are very serious cases,” said U.S. District Court Judge Elizabeth Kovachevich, who had presided over the trio's criminal trial earlier this year. “They are a reaction to the collapse of the financial system in this country. That is not to be underestimated, and I don't think the jury underestimated it.”</p><p>During the next five days, the rest of the 19 people indicted in the case — including scheme mastermind Craig Adams and his chief lieutenant, Rich Bobka — will be sentenced for their roles in a scheme that unfolded during the Southwest Florida real estate boom. That scheme involved artificially inflating the value of more than 150 properties and lying to lenders to get more than $200 million in mortgages.</p><p>Judge Kovachevich dealt with each defendant separately on Friday, starting with Streinz at 11 a.m. and ending with Hornberger at 7 p.m.</p><p>Moved by the fact that Cavallo and Hornberger have a 10-year-old son, the judge ruled that Hornberger should not receive the eight years in prison that government prosecutors were asking for, nor should she have to forfeit her condo in Kirkland, Wash.</p><p>But Kovachevich said she was not prepared to let Hornberger go unpunished: “I think you need a taste of prison,” the judge told the career nurse.</p><p>To Streinz, Judge Kovachevich said she wished he had never gotten involved with the conspiracy.</p><p>“But he took a criminal act and that is what his family and supporters have to realize — which Mr. Streinz has to realize, too,” Kovachevich said. “He is a federal felon. He knew what he was doing.”</p><p>Though the sentences handed down Friday were far longer than what any other participant in the case has received thus far, they are not as long as what government prosecutors were seeking.</p><p>Assistant U.S. Attorneys Christopher Tuite and Cherie Krigsman argued that the three defendants should receive even more time behind bars because of the sophistication of their crimes and the losses they inflicted on the banks that lent them more than $14 million — $8.3 million to Cavallo and Hornberger and $6.2 million to Streinz — in a five-year period.</p><p>The fraud was so complicated, Tuite said, that it was difficult for the title agent involved in the conspiracy — Lisa Rotolo — to reconstruct what happened. </p><p>Besides asking for enhanced sentences, Tuite and Krigsman repeatedly referred to the defendants as liars.</p><p>“It is your constitutional right to testify,” Tuite said to Streinz. “But it is not your constitutional right to lie.”</p><p>“She played the con out to the end,” Krigsman said, referring to Hornberger, who seemed at various points in the trial to have won some sympathy from jurors.</p><p>Krigsman said that there was not a person in the courtroom who did not empathize with a woman losing her 10-year-old son.</p><p>“But the devastation on this defendant's family is a reflection of her selfishness,” Krigsman said. “She should have thought how her actions might affect her son.”</p><p>Defense attorneys battled back with efforts to present their clients in the best possible light, and by enlisting the defendants themselves.</p><p>“I come before you. I am 54,” Streinz said. “I have already lost so much — my entire life savings, the prospect for meaningful employment. My house.</p><p>“I lost the equity ownership in my brother's business, my private investigator's licence and my insurance license,” he said.</p><p>Streinz said the case has taken a physical and mental toll on him and nearly cost him his marriage. “I will effectively be broke at the end of this case,” he said.</p><p>In equally emotional testimony, Cavallo blamed himself for putting his wife in harm's way.</p><p>“I take full responsibility for my lack of judgment. I take full responsibility for this woman here,” Cavallo said, turning from the judge to point at Hornberger, who was sitting at the defense table. “The only reason she is here is because she trusted me. I failed this woman — and she's an amazing woman.”</p><p>Cavallo said that he was busy in the Coast Guard during the height of the conspiracy and did not take the time to really figure out what his brother — Rich Bobka — was doing.</p><p>“I'm embarrassed by what he's done to our family and to the people I love,” Cavallo said.</p><p>Hornberger told the judge that she was a broken woman.</p><p>“There were offers to plead guilty, but it felt so wrong to me,” Hornberger said. “That's why I gave up my son for three months to have my say — to have my day in court. The alternative would have been to lie.”</p><p>If not for her son, Hornberger said, she would not care what happened to her.</p><p>“My spirit is broken,” she said. “My sense of self and my faith has been lost.”</p>